Lebanon was called Towwoh by the Newichawannock Abenaki tribe, whose main village was further down the Salmon Falls River. On April 20, 1733, the Massachusetts General Court granted Towwoh Plantation to 60 colonists, who first settled it in 1743. The township was incorporated on June 17, 1767, renamed Lebanon after the biblical land of Lebanon. It was Maine’s 23rd town. Lebanon annexed unincorporated land in 1785, and some from Sanford in 1787. It swapped land with Shapleigh, giving some in 1793, then annexing some in 1825.

Farmers found the surface of the town relatively level in the southeast, with extensive pine plains in the northwest. The chief crop would be hay. At the Salmon Falls River and the Little River were water power sites for mills. Lebanon had four sawmills, three gristmills, a shingle mill, a wool carding mill and a tannery. In 1850, Oren B. Cheney founded West Lebanon Academy. Beginning in the early 1870s, the Portland & Rochester Railroad ran the length of the town’s southeast side, with the Portsmouth, Great Falls & Conway Railroad crossing for a short distance on the western side.